NAR Litigation Settlement

The National Association of REALTORS® (NAR) on March 15 announced an agreement that would end litigation of claims brought on behalf of home sellers related to broker commissions. Initially, the agreement would have resolved claims against NAR, over one million NAR members, all state/territorial and local REALTOR® associations, all association-owned MLSs, and all brokerages with an NAR member as principal that had a residential transaction volume in 2022 of $2 billion or below. Since then, most of the entities who would have been excluded from the settlement have also made proposed agreements with the plaintiffs’ side and will now be part of the settlement that is still subject to final approval by the court later in 2024.

This Just In… MLS Policy Changes to be completed before August 17, 2024, the earliest date that Class Notice can occur

May 3, 2024

On May 3, 2024, NAR’s Chief Legal Office, Katie Johnson, announced that with assistance and approval from the relevant NAR Committees, required changes to NAR affiliated MLSs have been released. Here is a high level summary:

  • Eliminate and prohibit any requirement of offers of compensation in the MLS between listing brokers or sellers to buyer brokers or other buyer representatives.
  • Retain, and define, “cooperation” for MLS Participation.
  • Eliminate and prohibit MLS Participants, Subscribers, and sellers from making any offers of compensation in the MLS to buyer brokers or other buyer representatives.
  • Require the MLS to eliminate all broker compensation fields and compensation information in the MLS.
  • Require the MLS to not create, facilitate, or support any non-MLS mechanism (including by providing listing information to an internet aggregator’s website for such purpose) for Participants, Subscribers, or sellers to make offers of compensation to buyer brokers or other buyer representatives.
  • Prohibit the use of MLS data or data feeds to directly or indirectly establish or maintain a platform of offers of compensation from multiple brokers or other buyer representatives. Such use must result with the MLS terminating the Participant’s access to any MLS data and data feeds.
  • Reinforce that MLS Participants and Subscribers must not, and MLSs must not enable the ability to, filter out or restrict MLS listings that are communicated to customers or clients based on the existence or level of compensation offered to the cooperating broker or the name of a brokerage or agent.
  • Require compensation disclosures to sellers, and prospective sellers and buyers.
  • Require MLS Participants working with a buyer to enter into a written agreement with the buyer prior to touring a home.

Recently, the plaintiffs in the Sitzer-Burnett case filed a motion for preliminary approval of the proposed settlement outlined below. Judge Bough granted the motion today.

This action means the settlement is preliminarily approved and will continue towards final approval anticipated near the end of 2024. Importantly, per NAR Chief Legal Officer, Katie Johnson, “Settlement class members are now enjoined from filing complaints or prosecuting any claims based on the type of conduct at issue in Sitzer-Burnett and the other settled Actions on behalf of home sellers related to broker commissions against NAR or other parties that are released under the settlement.”

The plaintiffs asked for a hearing on final approval of the settlement on November 26, 2024. See this timeline for more information on next steps.

To be a party covered by the release of liability under the proposed settlement, the party must be a REALTOR® member as of August 17, 2024, which is currently the earliest anticipated date of class notice.

Stay updated here and at facts.realtor for all the latest developments.

Latest Updates from the Illinois REALTORS® Legal Team

What You Need To Know About the NAR Settlement with Betsy Urbance

NAR has worked hard for years to resolve this litigation in a manner that benefits our members and American consumers. It has always been our goal to preserve consumer choice and protect our members to the greatest extent possible. This settlement achieves both of those goals.

Nykia Wright

NAR Interim CEO

What are the key terms of the agreement?

Release of liability

The agreement would release NAR, over one million NAR members, all state/territorial and local REALTOR® associations, all association- owned MLSs, and all brokerages with an NAR member as principal whose residential transaction volume in 2022 was $2 billion or below from liability for the types of claims brought in these cases on behalf of home sellers related to broker commissions.

  • NAR fought to include all members in the release and was able to ensure more than one million members are included.
  • Despite NAR’s efforts, agents affiliated with HomeServices of America and its related companies—the last corporate defendant still litigating the Sitzer-Burnett case—are not released under the settlement, nor are employees of the remaining corporate defendants named in the cases covered by this settlement.

The agreement provides a mechanism for nearly all brokerage entities that had a residential transaction volume in 2022 that exceeded $2 billion and MLSs not wholly owned by REALTOR® associations to obtain releases efficiently if they choose to use it.

Compensation offers moved off the MLS

NAR has agreed to put in place a new rule prohibiting offers of compensation on the MLS. Offers of compensation could continue to be an option consumers can pursue off-MLS through negotiation and consultation with real estate professionals. And sellers can offer buyer concessions on an MLS (for example—concessions for buyer closing costs). This change will go into effect in mid-July 2024.

Written agreements for MLS participants acting for buyers

While NAR has been advocating for the use of written agreements for years, in this settlement we have agreed to require MLS participants working with buyers to enter into written representation agreements with their buyers. This change will go into effect in mid-July 2024.

Settlement payment

NAR would pay $418 million over approximately four years. This is a substantial sum, and it will be incumbent on NAR to use our remaining resources in the most effective way possible to continue delivering on our core mission. NAR’s membership dues for 2024 will not change because of this payment.

NAR continues to deny any wrongdoing

NAR has long maintained — and we continue to believe — that cooperative compensation and NAR’s current policies are good things that benefit buyers and sellers. They promote access to property ownership, particularly for lower- and middle-income buyers who can have a difficult-enough time saving for a down payment. With this settlement, NAR is confident it and its members can still achieve all those goals.